The economy is in a downturn, but that doesn’t mean alternative protein producers and food technology companies won’t be able to get funding this year.

However, the current business climate will not make things any easier either, according to a pair of analysts from Nomura Grintek told an audience at the Future Food-Tech Alternative Proteins conference in New York on Tuesday. The growth in investment dollars that has been seen in this area in recent years is likely not to continue, and fundraising in 2022 is projected to be about the same as last year. More investment dollars will likely go to more established food technology companies. There is unlikely to be any major food tech IPO this year, and it is unclear how the current publicly traded companies will perform.

“There is no way around this: we are going to have some really tough conditions in the next 12 to 24 months,” said David Verbitsky, head of agricultural technology and organic food at Nomura Greentech, which provides strategic financial advice for fundraising. M&A and IPO for companies based on sustainability.

But problems aside, Verbitsky and his colleague Morgan LeCony, head of food and beverage, said the funding outlook is largely optimistic. After all, more than $11 billion has been invested in food technology and alternative proteins between 2019 and 2021, with more than half of that coming in 2021, according to Nomura Greentech.

“There is no way around this: we will have very difficult conditions in the next 12 to 24 months.”

David Verbitsky

Head of Agricultural Technology and Sustainable Food, Nomura Greentech

LeCony said everyone from tech venture capital firms to government pension schemes and family endowments is pouring money into food technology companies.

“Every investor now sees alternative proteins as mainstream,” LeCony said.

Investor group from Synthesis Capital, FootPrint Coalition, Temasek and Norwest Venture Partners spoke at the conference on Wednesday. They stressed that while current economic conditions may make it difficult for technology and up-and-coming companies to find the investment capital they need right now, this is a short-term issue.

“Climate change is here to stay,” said Manuel Vanke, director of venture capital at the FootPrint Coalition. “Health problems are not going anywhere. So, in any case, this is a plan for 20-30 years. And the problems we are trying to solve are getting bigger.”

Stock prices fall but major funding rounds continue

Plant-based meat sales, once an area of ​​phenomenal growth, have largely stalled over the past 12 months as consumers shifted their buying behavior after the peak of the pandemic, with some choosing not to be repeat buyers. Oatly and Beyond Meat, both plant-only companies, also saw their sales and share prices drop. LeCony said Oatly’s stock is currently down 86% from its previous high last year, with Beyond Meat’s price 84% below that benchmark. But there’s a silver lining, LeConi says: when you add together all the fast-growing sustainable products that are publicly traded, their value has risen 181% since January 2018.

And while the economic downturn and inflation-related headwinds may mean that investment dollars don’t flow as freely as they did in years past, the money will still flow. Verbitsky noted that there were six major capex investments in this area this year: $400 million for Upside Foods, $135 million for Redefine Meat, $120 million for Remilk, $100 million for the Wildtype and Next Gen Foods rounds, and $85 million for MycoTechnology.

A new take on 3D printing plant-based meat steaks.

Courtesy of Override Meat

However, according to Verbitsky, these companies have something in common. They are either close to commercialization or have products on the market. They are relatively well-established, have significant intellectual property and unique technologies. They can readily provide proof-of-concept investors, have detailed plans for what they are going to do with investment funds, and have clearly articulated their paths to expand and enter the market.

LeCony said it’s clear from conversations with investors that they want to invest in companies that will demonstrate value in the near future.

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